Chan's Hedge Fund Bets on Asian Currencies Emulating Yen

  • Bloomberg-JPMorgan Asia Dollar Index rose 1.9% last quarter
  • `If dollar-yen goes down, dollar-Asians will go down:' Chan

Charlie Chan, a former Credit Suisse Group AG proprietary trader whose hedge fund profited from the yen’s slump in 2014, is now betting that the Japanese currency’s resurgence versus the dollar will benefit Asian peers.

The region’s currencies are set to extend an advance this year against the greenback until June as the yen appreciates and the Federal Reserve delays raising interest rates, the founder of Singapore-based Charlie Chan Capital Partners said in an April 8 interview. Japanese authorities had refrained from intervening to weaken the yen even when it was stronger than 80 per dollar in 2012 and are unlikely to step in at current levels, he said.

The Bloomberg-JPMorgan Asia Dollar Index of 10 regional currencies excluding the yen climbed 1.9 percent in the three months ended March 31, the first gain in seven quarters, as commodities rebounded and traders pushed back the timing of a U.S. interest-rate increase. The gauge had lost 8.3 percent since June 2014 through the end of last year.

“I am generally long Asian currencies,” Chan said, declining to provide further details. “I’m short dollar-Asia. If dollar-yen goes down, dollar-Asians will go down.”

The Fed will probably increase rates in the fourth quarter, he said. Traders scaled back expectations for a hike in December to less than 50 percent as of the end of last week, after predicting on April 1 a more-than-even chance of a move in November. A stronger yen eases pressure on other Asian nations to weaken their currencies to maintain the competitiveness of their exports.

“The U.S. dollar has limited room to continue strengthening,” Chan said.

The yen appreciated past 108 per dollar in Asian trading on Monday, and has strengthened 5.5 percent in the past month, outperforming all its major peers. The currencies of Malaysia, South Korea, Singapore and Taiwan have risen by at least 1.6 percent. The ringgit, won, Singapore and Taiwan dollars are all projected to weaken by the end of the second quarter, according to the median forecasts of analysts surveyed by Bloomberg.

Chan’s Splendid Asia Macro Fund gained 18 percent gain in 2014, he said last year. He now manages between $100 million and $200 million, he said, but declined to disclose what the returns have been since then, saying the information is private.

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